Build up or move out?
VALUE Gray says TV renovation programs make the process look easy but the reality is different.
Homeowners should not spend large sums on their property or make highly personal renovation choices, even if they plan to live in the property for years.
“It’s good to renovate with a buyer or a potential tenant in mind,” Gray says.
To make sure you don’t overcapitalise ( when you spend more on a house than what you can sell it for), it’s a good idea not to spend more than 5 per cent of the purchase price on renovations, according to realestate. com.
But expert builder Barry “Baz” Du Bois from Channel 10’ s The Living Room says a house will need about 8 per cent of its value spent on it every 10 years to keep it up to date. For example, on a house worth $ 500,000 today you would need to invest about $ 40,000. SET A BUDGET Du Bois says don’t renovate just for the sake of it. You need to work out a realistic budget before embarking on any project.
“Generally it’s the stuff you don’t see, like plumbing, structural design and engineering ( that adds up),’’ he says.
Always over- budget as there’s nothing worse than falling short of funds when your dream project is still far from completion.
Factor in an extra 10 per cent, so if you think you’ll spend $ 10,000, have an extra $ 1000 just in case you go over.
Chris Gray goes even further, suggesting it’s safer to expect your renovations to cost twice as much and take twice as long as you expect. HOW TO PAY FOR IT St George Bank’s general manager of retail banking, Andy Fell, says that it’s a good idea to start a savings plan as early as possible so that you have some money in reserve before you start renovating or relocating.
“Talk to your bank as early as possible, and use tools available such as St George’s Home Hero website, which shows you all the costs of buying a property,’’ he says.
Having funds in reserve to complete your renovation dreams will mean you have to fork out less on interest costs associated with taking out a loan or from refinancing your mortgage.